The nightmare of dealing with medical bills

The robo-call from the physicians' billing service had the intended effect: I panicked. It sounded like a collection agency. I almost paid what it asked.

In fact, we didn't owe a dime. By the time we got the call last week, followed by bills in the mail, our insurer, United Healthcare, had already paid most of the charges stemming from my daughter's emergency room visit in late August, when she had a nasty fall shortly after returning to college. Cayuga Medical Center in Ithaca isn't in our insurer's network, but United handled the bills as though it was because it had been an emergency, paying the hospital nearly $900. We paid only the $100 emergency room co-pay.

The doctors were another story. Cayuga Emergency Physicians billed $563. Again, United treated the service as in-network, and the physicians agreed to accept the plan's payment of $237.81.

But then the doctors turned around and charged us for the difference.

When there's a difference between the charge and the insurance reimbursement, and a health care provider tries to collect the difference from the patient — that is balance billing. Critics call it a huge problem, even for people with relatively good insurance. The California Association of Health Plans reported in 2007 that 1.76 million state residents who visited emergency rooms over a two-year period were balance-billed $300 each on average. Sometimes the charges were legitimate and sometimes not, but about half paid the bills anyway.

Those bills can be enormous. A 2010 report by America's Health Insurance Plans said out-of-network providers often charge exorbitant rates, as high as 70 times the Medicare reimbursement for a similar service. A report issued by New York state in March cited the case of a patient who went to an in-network hospital emergency room after severing his finger in a table saw accident. The finger was reattached by a nonparticipating plastic surgeon, and the bill was $83,000. The insurer estimated the going rate for the procedure was only about $21,000.

But balance billing does not occur only for medical emergencies. The New York State Department of Financial Services regularly receives complaints from consumers undergoing elective procedures who carefully selected surgeons and hospitals that participated in their health plans, only to be surprised by bills from nonparticipating providers — like anesthesiologists, radiologists and assistant surgeons — who became involved in their care without their knowledge.

In some cases, patients who are covered by health maintenance organizations, or HMOs, may actually be better protected against these kinds of charges than patients in flexible plans like preferred provider organizations that provide limited out-of-network coverage. New York state laws protect HMO members from out-of-network provider bills as long as they follow the plan's rules, said Elisabeth Benjamin, a co-founder of the Health Care for All New York coalition.

Patients are often surprised by bills after receiving services like anesthesia, pathology and radiology. Those specialists, who don't hang out a shingle and may not rely on ongoing relationships with patients, often avoid signing up with health plans in order to set their own rates.

Illinois has passed a law holding consumers harmless from fees for certain medical services — like anesthesia — that are often provided by nonparticipating providers at in-network hospitals, Benjamin said. Her organization is working to pass a similar law in New York.

Such a law would mean that "providers and insurance companies would have to go to binding arbitration to resolve the dispute, and neither of them can go after the consumer," she said.

State laws, however, do not resolve balance-billing problems for the many consumers who are covered by self-insured employer-provided health plans, which are exempt under the federal Employee Retirement Income Security Act.

The federal Affordable Care Act contains some provisions to protect patients from balance billing for emergency medical care, but they apply primarily to new health plans and only in limited cases to existing employer-provided coverage. It also sets standards for what health plans must pay out-of-network providers, the rationale being that if providers are paid adequately, they are less likely to balance bill.

So what's a consumer to do?

• Know which hospitals are in your network in case of an emergency. Doctors who don't participate in your network may work at the hospital, but it's a start.

• If you're having an elective procedure, it is not enough to choose a doctor who takes your insurance. Ask who else will be involved in your care, and insist that they all be in-network. Even if you have out-of-network coverage, it is likely that only a small fraction of actual costs will be covered if you wind up in an out-of-network facility.

• Carve out time to deal with the bills. Our insurer, United Healthcare, said we were not responsible for the difference between the emergency physicians' charges and its payment because of a third-party agreement between them, but it took several weeks and half a dozen calls to the insurer and the physicians' billing service to get the matter resolved.

At first, the person I spoke with refused to discuss my daughter's account because of "medical privacy laws." Then, she said I had to fax her a copy of the insurer's explanation of benefits because they had no record of payment. When I asked to speak to her supervisor, the record was miraculously found.

• If you think your plan is not reimbursing you enough for out-of-network care, see the do-it-yourself-appeal packet at www.communityhealthadvocates.org. Check your state health consumer protection laws, though many large self-insured companies are not covered by these laws.

When you find yourself on the wrong end of balance billing, "the worst thing is to do nothing," said Cheryl Fish-Parcham, the deputy director of health policy for Families USA, "because then it gets on your credit report, and it could be something you didn't owe to begin with."